Crypto has a reputation for being a volatile investment option. It’s generally accepted that if you invest money into any crypto, you’re assuming some risk. However, that risk can come in more forms than expected and go beyond the rise and fall of crypto’s value.
Cryptocurrencies also have the potential for serious security breaches and thefts. While measures are taken to help prevent these incidents and protect people’s assets through security protocols like cryptography, weaknesses can still leave funds and personal information vulnerable to malicious actors.
These weaknesses can typically be found in coding bugs for exchanges or through scams, phishing schemes, or malicious code. By taking advantage of these weaknesses, hackers can bypass the security of a crypto network and disrupt its operations or steal from them. In 2022, $3.7 billion in crypto was stolen, and in 2023, an additional $1.7 billion.
Since the first cryptocurrency was introduced to the public in 2009 by the anonymous computer programmer (or possibly programmers) known only by the pseudonym Satoshi Nakamoto, many major security breaches and thefts have taken place. This article will explore five of the most significant breaches since then.
1. Ronin Network, $620 Million
The Ronin Network is a blockchain system that powers the popular crypto games Pixel and Axie Infinity. Through these games, players can earn crypto tokens or coins; those who have played at or are looking for a sweeps coins casino might be familiar with this play-to-earn concept.
In March 2022, the Ronin Network had $620 million in the form of Ethereum and USDC stablecoin stolen by hackers. It was, and still is, the most significant security breach and theft of crypto ever.
An FBI press release revealed that the theft was carried out by the Lazarus Group and APT38, part of the Democratic People’s Republic of Korea. To hack the network, the hackers exploited a weakness in the blockchain’s bridge and compromised private keys used to authorize transactions, like withdrawals. Using these to their advantage, the hackers were able to abscond with the enormous sum.
The company reimbursed those affected by the theft, which impacted thousands. Despite this significant theft and security breach, the Ronin Network recovered from the incident and remains an active blockchain system today.
2. Poly Network, $611 Million
In the summer of 2021, the Poly Network was the victim of a major theft by a hacker looking for a challenge — the largest amount ever stolen in a crypto hack at that time, amounting to a whopping $611 million. Though this was an impressive sum, the hacker wasn’t looking for riches; they were hacking into this decentralized finance platform just for the fun of it.
After the theft was discovered, the Poly Network took to X (previously Twitter) to request that the currency stolen be returned. The company even offered the hacker a bounty for showcasing the flaw in the network’s system and offered them a job as “Chief Security Advisor.”
The hacker, who remains anonymous but was dubbed “Mr. White Hat” by the Poly Network, ended up returning all the stolen funds to the company.
3. Binance Smart Chain Network, $586 million
As of today, Binance Smart Chain (BSC) is the largest crypto-exchange platform on the market, an especially considerable feat since it faced a serious security breach in 2022. The company’s cross-chain bridge allowing the exchange of cryptocurrencies was hacked and lost $586 million in its BNB tokens.
As a crypto-exchange platform, BSC is more susceptible to hacks through weaknesses or bugs in the coding. These bugs were how hackers managed to break into the exchange and take the funds. The company was transparent about the event, keeping its users and the general public updated about the situation — a response that bodes well in fostering trust going forward.
4. Coincheck, $534 Million
Coincheck is a widely used crypto wallet and exchange platform that, unfortunately, has also been a victim of a major security breach that caused significant financial loss. In 2018, a hacker group broke into the network through a hot wallet (a crypto wallet connected to the internet) and stole $534 million in NEM (New Economy Movement) coins.
At the time, it was the biggest crypto theft to have ever taken place. The company temporarily shut down its operations and reimbursed its customers for their losses.
5. FTX, $400 Million
In November 2022, the crypto exchange platform FTX was facing a time of intense turmoil filled with scandal, robbery, and the collapse of what was previously a thriving company. FTX’s CEO Sam Bankman-Fried was accused of embezzlement and misuse of customer money, accusations he was convicted of a year later in November 2023. Bankman-Fried was sentenced to 25 years in prison and was required to make a $11 billion repayment.
When news broke about Bankman-Fried’s misuse of funds, customers left the FTX platform in droves, and the company’s coin, FTT, was sold off by other exchanges, leaving the company in serious financial distress. The news broke on November 2, and by November 11, FTX filed for bankruptcy; on that same day, it was hacked and lost a significant sum worth more than $400 million.
Initially, the hack was believed to have been carried out by an executive of FTX, but it has since been attributed to three US hackers who carried out a range of sim-swapping hacks targeting FTX and other organizations.
Conclusion
Despite the many safeguards and security features in place, major cryptocurrency platforms have fallen victim to malicious actors and losses in the billions of dollars. These five thefts are among the largest to have taken place and pinpointed where and how each platform can improve its security measures.
If you decide to invest your finances into cryptocurrencies, be sure to acquaint yourself with the best practices that will help keep your finances as secure as possible at an individual level to avoid getting caught in the aftermath of a security breach.
